updated 02:00 am EDT, Tue May 7, 2013

Samsung fighting back with staggering advertising budget

A parts supplier with a good track record of providing advance information on smartphones is now saying that it has heard that Apple is planning more than just a single model of the so-called "low-cost" iPhone. The rumored phone, which has been speculated on for over a year, is said to be aimed at developing markets where pre-paid phones and plans dominate and is thought to be largely plastic-based, but have most of the same functionality as current iPhone models -- but cost around $330-$400, as much as 50 percent less than the off-contract price of a current iPhone.

While the source provided no timetable for release, the rationale provided for Apple capitulating to the lower end of the market was said to be to buy time for the company while it works on the next revamp of the iPhone, which might presumably be called the "iPhone 6" and would not be expected for more than a year. Apple is said to be particularly concerned with the Android platform's success in the low end in countries with large prepaid customer bases, but has always steered budget-minded customers to its lower-cost-contract offerings such as the iPhone 4S and iPhone 4. The company has seen demand for those older models increase substantially, particularly with the addition of some monthly-payment or "trade in" options in countries such as India.

Should the pricing -- or the low-cost iPhone itself -- turn out to be true, it would actually be positioned as more of a mid-range device, slightly more expensive than low-end phones but with functionality largely comparable to premium smartphones thanks to Apple's own in-house chip engineering and control of both hardware and software integration. Such a combination might drive more mid-price device sales in a market that is currently split mostly between low-end feature and barely-smart prepaid phones and high-end, premium devices on subsidized contracts.

Also as part of the report, the Korea-based ETrade Supply mentioned that Apple's main rival in the smartphone arena, Samsung, spent more on advertising last year than Apple, Coca-Cola, Microsoft and HP combined -- $4.3 billion. This figure, staggering as it is, is accompanied by an equally gigantic $5.4 billion budget for other types of sales, marketing and promotion.